Wells Fargo (WFC) – Get report achieved better-than-expected fourth-quarter earnings, but the share price fell in the pre-trading market after earnings fell below forecast.
The San Francisco-based bank posted net income of $ 2.99 billion, or 64 cents per share, for the fourth quarter, compared to $ 2.87 billion, or 60 cents per share, in a comparable year earlier. Analysts surveyed by FactSet were looking for earnings of 58 cents a share.
Revenue was $ 17.93 billion, down from $ 19.86 billion in the fourth quarter of 2019. Analysts surveyed by FactSet expected revenue of $ 19.387 billion.
Net interest income was $ 9.275 billion, down $ 17 million, while non-interest income was $ 8.65 billion, roughly unchanged. Average deposits were $ 205.8 billion, which was 20% lower.
“Although our financial performance improved and we earned $ 3 billion in the fourth quarter, our results continued to be affected by the unprecedented operating environment and the work required to address our significant heritage issues,” said CEO Charlie Scharf. said in a statement.
Wells Fargo agreed in February 2020 to pay $ 3 billion to settle criminal charges and civil action as a result of its widespread abuse of customers in its community bank over a period of 14 years.
A decline in consumer and business lending as a result of the Covid-19 pandemic and the corresponding economic downturn was partially offset by an increase in home loans, the bank said.
Consumer and small business banking services declined from $ 5.1 billion by 8% to $ 4.70 billion, while home loans rose by 2% to nearly $ 2 billion from $ 1.96 billion.
Underperforming assets, meanwhile, increased by $ 9% to $ 8.89 billion from $ 5.65 billion, while non-performing loans increased to $ 8.73 billion from $ 5.65 billion “… mainly due to increases in the ‘Commercial real estate, mortgage and lease portfolios were partially offset by a decline in the commercial and industrial portfolio,’ the bank said.
Net installments remain low at $ 584 million, almost a quarter from a year earlier. So far, the government’s extensive unemployment, stimulus tests, relief for small businesses and loan deferrals have offset the wide-ranging loan losses, but bank executives warn it could still come.
The bank generally has a restructuring cost of $ 781 million, a reserve release of $ 757 million due to the sale of its student loan portfolio and a hit of $ 321 million due to the “impact of the recovery of customer restorations “, included.
Wells Fargo is a number of other major U.S. banks that are getting the green light to repurchase through the Federal Reserve in the first quarter of 2021.
The US Federal Reserve has lifted its repurchase ban on the most lucrative credit providers, saying their capital buffers are sufficient to potentially withstand hundreds of billions of dollars in loan losses related to the Covid-19 pandemic and economic downturn.
In this line, the management of the company approved an increase in the bank’s authorization to repurchase ordinary shares by 500 million shares, bringing the total authorized amount to 667 million ordinary shares.
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